Investors are increasingly looking to factor investing as a valuable tool to help achieve investment objectives.
Today, possibly half of institutional investors use factor strategies for at least some portion of their portfolios. And when over 300 global institutional and wholesale investors who are already using factors were asked why they did so in a 2018 Invesco survey, the majority named risk-adjusted returns as their most important measure of success.1
Given expectations of a lower-return environment in the future, the desire to enhance returns is sensible. But, most investors are not experienced with factor investing nor do they fully understand the practical challenges of applying the theory to practice.
In the second paper of this series, we addressed how investors can start by looking at their existing portfolios in factor terms and understanding where they are over- and under-weighted. In this latest paper we discuss how they can then deliberately position their portfolios across factors in an attempt to enhance performance.
We explore:
Also in the Invesco Investment Solutions focus paper series:
